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As Republican chairman of the House Budget Committee, Paul Ryan has been prominent in budget battles with the White House. This has made him a national figure, even earning him a spot on Barron's cover in a mud-slinging contest with the president ("Grow Up, Guys!" May 2, 2011). That story proved more prescient than we anticipated. In naming the seven-term Wisconsin congressman as his vice-presidential running mate, presumptive presidential nominee Mitt Romney has placed in much bolder relief his campaign's position on the federal budget.

Budgets, remember, consist of two halves: revenue and outlays. While Ryan and Romney have had similar plans for the revenue side of the ledger—both have advocated an extension of the Bush tax cuts—the spending side is where Ryan's position brings a sharper focus to Romney's campaign.

The two halves together produce a noticeably different outcome from the one proposed by President Obama. Neither Obama nor Ryan would achieve a balanced budget, even by 2022. But under the VP contender's plan, the red ink would flow at nearly half the rate of the president's.

As the chart on this page shows, that would have a major impact on outstanding federal debt, technically known as "debt held by the public" to distinguish it from what the government owes to itself in the form of so-called trust funds. Ryan would slow the growth of that debt as a share of gross domestic product from 73% in fiscal year 2012 to 62.3% by 2022. The president, according to an analysis by the nonpartisan Congressional Budget Office, would nudge it to a peak of 80.4% by 2014, and leave it at 76.3% by 2022.

Not that either Ryan nor Obama qualify as budget-cutters in the way that we ordinarily use the term. In the time-honored newspeak of Washington, their proposed "cuts" in spending mainly take the form of reductions in projected increases.

IRONICALLY, WHEN OBAMA attacked Ryan in April as a purveyor of "thinly veiled Social Darwinism," the president lent undeserved credibility to his rival's image as a fiscal conservative. Ryan would raise federal spending to $4.89 trillion by 2022, from $3.80 trillion in federal fiscal year 2012. The president would boost it to $5.61 trillion.

In both cases, however, the rate of increase in spending would trail the expected pace of expansion in gross domestic product. So from 23.4% of GDP in the current fiscal year, Ryan's proposed outlays would decline to 19.8% by 2022; Obama's would tick down to 22.8%.

A key reason for the difference, much discussed in the past week, is that Ryan would slow the growth of entitlement spending. He wouldn't touch Social Security, which apparently still is the deadly third rail of politics, but he would restructure Medicare and Medicaid.

For Medicare, which applies when people turn 65, he would give those under 55 the option of a voucher that would permit them to purchase private insurance. For Medicaid, the federal/state program that provides health coverage for the poor, he would convert the federal share of funding into fixed block grants for the states.

Cato Institute budget analyst Chris Edwards points out that the Medicaid block-grant approach would replicate the welfare-funding reform that President Clinton signed into law in 1996. With a similar structure, states would have an incentive to allocate the money more effectively, Edwards contends. Under the current Medicaid program, states receive matching funds from the federal government when they increase spending, providing no incentive to control costs.

OBAMA'S PROPOSED TAX HIKES, including a 30% minimum tax on people earning more than $1 million a year, would raise more revenue. By 2022, revenue under his plan would equal 19.8% of GDP, compared with Ryan's 18.7%. But lest Ryan be thought of as a tax-chopping zealot, in most years of economic expansion—including the 1950s, when top marginal rates on personal income were much higher—the federal tax take has run less than 18.7%.

Ryan would replace the current six tax rates with two: 10% and 25%; and he would broaden the tax base by eliminating many loopholes and deductions. He would also lower the current 35% top statutory rate on corporations to 25%, a move that would hardly make the U.S. an outlier. Currently, the effective tax rate on U.S. corporations is the second highest among major industrial nations, behind only Japan. In Sweden, often viewed as a land with punishingly high taxes, the effective corporate rate is 13.5%.

While Ryan's planned revenue would be lower, his spending would be lower still, with the net result that his deficits would be smaller than Obama's. Deficits must be financed by debt; thus, under Ryan's plan, debt as a share of GDP would fall, while under the president's, it would trend up. (For more on the debt as a share of GDP, see Economic Beat .)

Cato's Edwards, keeper of www.downsizinggovernment.org, would much prefer that Ryan propose a balanced budget than just a smaller deficit. But he gives the presumptive vice presidential candidate a lot of credit. "Ryan has proposed fundamental reform of entitlement programs, which threaten to eat up the federal budget," observes Edwards, "and he managed to convince a majority in the House to support his plan. That's no mean feat, given the spinelessness and shortsightedness of most politicians. Let's hope he helps convince the American people to share that vision."